Caribou Closings Might Mean Indie Coffee Boom is Brewing

"If a business has to go under, I'd prefer that it be a chain," Nancy Breymeier, co-owner of the Amore coffee shop, said.

Nancy Breymeier doesn’t want to see anyone lose their jobs – least of all baristas, kitchen staff and her other brethren in the retail coffee business.

But Breymeier, co-owner of the Amore coffee shop in the Cherokee Heights neighborhood of St. Paul’s west side, had to cop to just a smidgen of satisfaction when she heard in April that coffee giant Caribou would be closing 80 stores nationwide, including a handful in Minnesota.

“If a business has to go under, I’d prefer that it be a chain,” said Breymeier. “It allows people to understand that it’s a tough world out there – and it’s even tougher for independent businesses than it is for chains.”

In addition to the closings, 88 Caribou stores will be converted to Peet’s Coffee & Tea, the flagship stores of the California-based Peet’s chain that bought Caribou last December.

The immediate impact for Amore and similar independents might not be apparent, but the move by Brooklyn Center-based Caribou (which still has 468 locations in the United States and 10 other countries) could signal a new age of prosperity for quality-focused neighborhood coffee shops.

Sales of specialty coffees have done nothing but grow in the United States in recent years, as has the number of Mom-and-Pop stores. While the Starbucks and Dunn Bros. of the world continue to dominate the market, independents see a comfortable niche where they can prosper.

More independents

The situation for Amore might be typical: There are still a couple of Caribou locations close to their location, but there are even more independents: Capital View Café and Jerabek’s are nearby, while Claddagh Coffee, Fresh Ground Coffeehouse and Mojo Monkey Donuts are just across the river on West 7th Street.

And yet, Amore’s revenues have done nothing but grow since it moved from its coffee-logged (11 shops within a mile’s radius) Grand Avenue location three years ago. That could just be because people are drinking more coffee – or it could be because people are more and more demanding really good coffee.

Breymeier’s and business partner Cathy Hauser’s decade in the coffee game have given them a perspective on the development of retail coffee. They figure the industry has involved in three stages: from the tin-pot, dime-a-cup java of old to the mass-produced Starbucks model of the past two decades to the small, neighborhood shops that are focused on quality and atmosphere.

“We [the industry] haven’t quite made the jump to that third stage yet,” said Breymeier. “It’s still the masses that you make money from. When you start to specialize, you narrow down your pool of customers.”

Nonetheless, the key to the survival and prosperity of independent coffee shops will continue to be quality and atmosphere. Research by the Small Business Development Center found that 37 percent of the coffee consumed in the United States last year was classified as “gourmet,” indicating that people will go out of their way for a cup of excellence.

Caribou Coffee on Grand Avenue in St. Paul

                                              A Caribou Coffee shop located at 1055 Grand Ave. in St. Paul.       MinnPost photo by Corey Anderson

Typical of such stores, there’s no drive-through window at Amore, and art exhibits, free Wi-Fi and other amenities encourage customers to stay and linger, not just stop for a cup to go. Unlike most chain shops, which are purposely located on areas heavy with car traffic, independents seek to become neighborhood fixtures.

That factor is one of several that could point to a mini-renaissance of independent coffee shops in the Twin Cities, according to Tracy Allen, owner of Kansas-based Brewed Behavior, a marketing and sales consultancy focused on coffee roasters.

Allen was in Minneapolis recently, and he saw an atmosphere for independents that could easily turn Caribou’s setbacks to their advantage. While some of the money spent at Caribou might now automatically go to the nearest Dunn Bros., some will also likely go to the nearest independent.

“There is opportunity to benefit from the behavior that companies like Caribou have created,” said Allen. “The independents as a rule will get the opportunity to gain some market share. Those dollars are going to be up for grabs again.”

Snob appeal

Then there’s the issue of quality, and the snob appeal that comes with it. Just as the boom in craft beers has caused many a bar-goer to whisper furtively when ordering a Miller Lite, independent stores are and will increasingly be seen as the place where one goes to be perceived as a true connoisseur of hot brew – not just someone out for a quick morning jolt of mass-produced caffeine.

“We’re getting to be snobbish that way,” said Breymeier.

Allen readily latches on to the craft beer comparison, saying that a growing segment of consumers favors quality enough to support numerous independent shops.

“Throughout my career, I’ve heard people compare coffee over and over to wine that way,” said Allen, “but to me, the way people appreciate really good coffee has been more closely associated with small-batch craft beer operations.”

Finally, contrary to the embarrassment of coffee-shop riches that seems to exist in areas like St. Paul’s west side, Allen thinks the Twin Cities might, if anything, be underserved by purveyors of quality java.

“Minneapolis-St. Paul is among the 15 biggest cities in the U.S.,” he said. “Yet in my opinion, this market is incredibly underdeveloped for small, specialty coffee roasters and retailers. It could be an exciting time here.”